Adani Group to Buy 74 Percent Stake in Mumbai International Airport Limited
CEOInsights Team, 0
GVK had moved court to block the attempts of sale citing they have a right to first refusal. However, the company hasn’t been able to garner funds. With six airports already in kitty, this will make the group second largest private airport operator after GMR group which operates Delhi and Hyderabad airports. GVK Group and Adanis have agreed that Adani will offer a stand-still to GVK, in addition, to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it. “Adani Airport Holdings Limited intends to infuse funds into MIAL to ensure that MIAL receives much needed liquidity and also achieves financial closure for Navi Mumbai Airport,” the company said in a statement.
The deal has been finalized even though a consortium of foreign investors which had earlier signed a binding
Adani Airport Holdings Limited intends to infuse funds into MIAL to ensure that MIAL receives much needed liquidity and also achieves financial closure for Navi Mumbai Airport
agreement with GVK group for buying the asset has legally challenged it. The consortium led by UAE’s sovereign fund Abu Dhabi Investment Authority (ADIA), India’s sovereign fund NIIF and Canada’s Public Sector Pension (PSP) Investments have served a legal notice to the GVK group and lenders saying that selling stake in Mumbai International Airport Limited (MIAL) to Adani group will be a breach of the agreement they had entered in October 2019. The acquisition will also give Adanis ownership of the upcoming Navi Mumbai airport in which MIAL holds 74 percent stake.
“There was immense pressure from the lenders on GVK group as there were upcoming debt payment schedules of MIAL. The banks were particularly concerned as they felt that parent firm’s poor liquidity position worsened by the effect of coronavirus on airport business will make it difficult to stick to repayment. The transaction is positive for everyone,” says a banker involved in the process. He also said that GVK’s entire stake in MIAL is pledged with HDFC bank and YES Bank.
According to the agreement, Adani Group will acquire GVK’s debt from lenders. Adani Group has publicly disclosed plans of becoming ‘India’s leading airport operator’, something it also stated in its annual report for FY20. It also stated in the annual report that growing domestic passenger traffic is providing immense opportunity to expand and scale up its business.